Published on June 6th, 2013 | by Guest0
A Sanction For (Almost) Every Reason
by Erich Ferrari
via Sanctions Law
I suppose the President has gotten tired of Congress getting all of the attention when it comes to imposing new sanctions on Iran. Earlier this week, he issued a new executive order implementing certain sanctions that were previously called for in the Iran Freedom and Counter Proliferation Act (IFCA) and adding some new sanctions of his own. Here are the highlights:
1) Energy Sanctions: These sanctions target activities related to the exploration, extraction, production, refinement, or liquefaction of petroleum, natural gas, or petroleum products in Iran. They allow for the targeting of those parties involved in the supply or provision of goods or services that contribute to Iran’s ability to develop its domestic petroleum resources, the maintenance or expansion of Iran’s domestic production of petroleum products; and Iran’s ability to import or export petroleum or petroleum products.
2) Shipping Sanctions: These sanctions target activities related to the transportation of goods by seagoing vessels flying the flag of the Islamic Republic of Iran, or controlled directly or indirectly by the Government of Iran. When these sanctions go into effect they will already target the National Iranian Tanker Company and the Islamic Republic of Iran Shipping Lines. These sanctions will allow for the targeting of those parties involved in the provision of crude and product tankers to Iran, the provision of registry, flagging, or classification services of any kind, the supervision of and participation in the repair of ships and their parts, the inspection, testing, and certification of marine equipment materials and components, the carrying out of surveys, inspections, audits and visits, and the issuance, renewal or endorsement of the relevant certificates and documents of compliance, as they relate to ships and shipping, or the supply or provision of any other goods or services relating to the maintenance, supply, bunkering, and docking of vessels flying the flag of the Islamic Republic of Iran, or controlled directly or indirectly by, or on behalf of the Government of Iran (GOI) or an Iranian person.
It should be noted, however, that if a non-Iranian vessel is transporting non-sanctionable goods to or from Iran, bunkering in a third country will not be subject to sanctions provided that no other sanctionable activity is involved.
3) Shipbuilding Sanctions: These sanctions target activities related to the construction of seagoing vessels, including oil tankers and cargo vessels, in Iran. Once implemented they will allow for the targeting of those parties involved in the building and refit of vessels, the provision or refit of items such as (i) steam turbines and their parts for marine propulsions; (ii) marine propulsion engines and parts used solely or principally with them; (iii) other gas turbines for marine propulsion; (iv) ship or boat propellers and blades; and (v) direction finding compasses and other navigational instruments and appliances solely for the maritime industry; (vi) the provision of other goods used in connection with building and propulsion of vessels; (vii) and the provision of technical assistance and training relating to, and financing of, the building, maintenance or re-fitting of vessels.
4) Precious Metal and Semi-Raw Material Sanctions: These sanctions will target activities related to the provision of the following raw materials to Iran: various types of steel; aluminum metal and its alloys; base metals of single or complex borides of titanium; beryllium metal and its alloys; boron metal and its alloys; cobalt metal and its alloys; copper infiltrated tungsten metal; copper-beryllium metal; germanium metal and its alloys; graphites; hastelloy; inconel; magnesium metal and its alloys; molybdenum metal and its alloys; neptunium-237 metal and its alloys; nickel metal and its alloys; nickel aluminide metals; niobium metal and its alloys; niobium-titanium filaments; plutonium metal and its alloys; porous nickel metal; silver infiltrated tungsten metal; tantalum metal and its alloys; tellurium metal and its alloys; titanium aluminide metals; titanium metal and its alloys; tungsten metal, tungsten carbide metal, and their alloys; uranium titanium alloy metals; and zirconium metal and its alloys and compounds.
Further, the provision of the following precious metals will also be cause for sanctions targeting: silver (including silver plated with gold or platinum); gold (including gold plated with platinum); base metals or silver, clad with gold, not further worked than semi-manufactured; platinum; iridium; osmium; palladium; rhodium; ruthenium; base metals, silver or gold, clad with platinum, not further worked than semi-manufactured; waste and scrap of precious metal or of metal clad with precious metals, other waste and scrap containing precious metal or precious-metal compounds, of a kind used principally for the recovery of precious metal.
Persons determined by the Department of the Treasury or the Department of State, as appropriate, to have established and enforced official policies, procedures, and controls to ensure that the person does not sell, supply, or transfer to or from Iran, or facilitate or conduct a significant financial transaction to sell supply, or transfer to or from Iran, the materials listed above will not be targeted for sanctions pursuant to IFCA.
5) Industrial Software Sanctions: These sanctions allow for the targeting of parties, pursuant to IFCA, involved in the provision of industrial software to Iran.
6) Insurance Sanctions: These sanctions will, naturally, target the provision of insurance and re-insurance services to Iran, but will not apply in matters involving insuring humanitarian trade in food, medicine, and medical devices, or to parties determined to have established and enforced official policies, procedures, and controls to ensure that the person does not sell, supply, or transfer to or from Iran, or facilitate or conduct a significant financial transaction to sell supply, or transfer to or from Iran, insurance services will not be targeted for sanctions pursuant to IFCA.
7) Financial Sanctions: The new Executive Order also allows for the targeting of foreign financial institutions facilitating any type of significant financial transactions for parties on the OFAC SDN List. These sanctions include a prohibition on opening and maintaining correspondent banking relationships on behalf of such foreign financial institutions.
OFAC has made it clear, however, that these sanctions will not include targeting of foreign financial institutions who 1) facilitate transactions for the provision of agricultural commodities, food, medicine, or medical devices to Iran; 2) conduct a significant financial transaction for the purchase of petroleum or petroleum products from Iran if a significant reduction exception under the NDAA applies to the country with primary jurisdiction over the FFI and the financial transaction is for trade between Iran and the country with primary jurisdiction over the FFI, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI; 3) conduct a significant financial transaction related to the sale, supply, or transfer of natural gas to or from Iran if the transaction is solely for trade between the country with primary jurisdiction over the FFI and Iran, and any funds owed to Iran as a result of such trade are credited to an account located in the country with primary jurisdiction over the FFI; and 4) participating in certain activities related to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey.
8) Diversion of Goods Sanctions: These sanctions allow for the targeting of parties involved in the diversion of goods intended for the Iranian people or the misappropriation of proceeds from the sale or resale of such goods.
9) Currency Sanctions: These new sanctions allow for foreign Financial Institutions to lose their correspondent and payable-through account relationships with U.S. depository institutions if they are (i) knowingly conducting or facilitating significant transactions related to the purchase or sale of Iranian rials or a derivative, swap, future, forward, or other similar contract whose value is based on the exchange rate of the Iranian rial, or (ii) maintaining significant funds or accounts outside the territory of Iran denominated in the Iranian rial.
10) Automotive Sanctions: The new Executive Order authorizes the imposition of sanctions to impair the ability of foreign financial institutions to obtain correspondent and payable-through accounts in the U.S. and provides for Iran Sanctions Act-style sanctions for certain types of transactions, in cases where the provision of significant goods or services used in connection with Iran’s automotive sector have been made. That sector includes the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles. The goods and services implicated include goods or services that contribute to (i) Iran’s ability to research, develop, manufacture, and assemble light and heavy vehicles, and (ii) the manufacturing or assembling of original equipment and after-market parts used in Iran’s automotive industry.
11) Sanctioned Parties Sanctions: As if targeting an entity for sanctions wasn’t enough, the new Executive Order targets parties deemed to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to, or in support of, (i) Iranian persons included on the SDN List as well as other persons included on the SDN List whose property and interests in property are blocked pursuant to Executive Order 13599, and (ii) persons whose property and interests in property are blocked pursuant to subsection 2(a)(i) of the E.O. Certain activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey are excepted from the material support provision of the E.O., as are Iranian depository institutions solely blocked pursuant to Executive Order 13599.
That’s all for now. There is a lot of news about these new sanctions so surely additional commentary will be forthcoming soon. Stay tuned.
— The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.